‘David Cameron and George Osborne are now selling off more silver at knockdown prices than Thatcher ever considered.’
Photograph: John Lynch/Demotix/Corbis

Selling off the family silver: that was the accusation against Margaret Thatcher, when Harold Macmillan condemned her with resoundingly aristocratic disdain. “The sale of assets is common with individuals and the state when they run into financial difficulties. First the Georgian silver goes, and then all the nice furniture that used to be in the saloon. Then the Canalettos go.” He ventured “to question the using of these huge sums as if they were income.”

The wise old man warned in the Lords: “Modern economists have decided there is no difference between capital and income. I am not so sure.” He recalled 1929, “when your Lordships had friends, very good friends, who failed to make this distinction. For a few years everything went well, and then at last the crash came, and they were forced to retire to some dingy lodging-house in Boulogne.”

Harold Macmillan, you may remember, was once claimed by David Cameron as his role model, back in his sunshine-in, “compassionate Conservatism” days. Cameron had a photo of Macmillan, not Thatcher, on his desk. No longer.

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For Cameron and George Osborne are now selling off more silver at knockdown prices than Thatcher ever considered. She sold off state industries; they are bent on shedding the fabric of the state itself – capital, boiled down and poured into current income – as if there were no tomorrow. Before long, large parts of the public realm will feel like that dingy Boulogne boarding house.

New analysis shows a record £26.4bn was raised last year alone by state sales. The Press Association lists this fire sale: Royal Mail, Eurostar, Northern Rock and shares in RBS and Lloyds were just the ones that made headlines (and though the chancellor today halted the sale of the rest of the Lloyds shares, that’s just what it was: a delay). Already this year, 67 acres of King’s Cross land has been sold for £371m. And London land is exceptionally precious – land the state will need but can never regain.

Ahead lies the threatened sale of Channel 4, vengeful and ideological – and much more. “Central to our plan to fix the public finances is the sale of government assets to help pay down the national debt and ensure economic security for working people,” says the Treasury. Listen to Macmillan rattling a silver ladle his grave.

The forced sale of state-owned land is asset-stripping with a political purpose, matching Osborne’s target to shrink the state to 35% of GDP by 2020. Cameron says that’s permanent, so of course they will sell the land it stands on, to stop it regrowing.

The closeness of this government with private interests, the in-and-out revolving doors between ministers and business, (Labour ministers did that too) and the sweetheart tax deals revealed over Google, make these sales at too-low prices doubly suspect. Whether ineptitude, naivety or venality is to blame, the taxpayer rarely comes well out of these selloffs.

The NHS, councils, defence and other departments are being instructed to shed land and to switch the proceeds to plug current deficits. The NHS faces a £2.5bn shortfall this year, “or perhaps north of that”, the NHS Improvement head told the public accounts committee.

Using sales proceeds may help a bit this year, but it does nothing to solve next year, or future funding when every scrap of land has gone. Schools, clinics, care homes and other services will be needed, with a growing population, more children and more old people. But Osborne’s legacy means nowhere to build.

The assault on socially owned housing and land forces councils and housing associations to sell, using the money for current spending. That stops borrowing against current property to build new: they want no new social housing for rent. That’s a win-win for Osborne and Cameron: they get money in to make it look as if deficit and debt are reducing while withdrawing the state from housing altogether.

The desperate need for housing of every kind is ignored as land is squandered, sold to developers, much of it in high-value areas, sold to be mothballed by foreign investors using homes as gold bullion.

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NHS privatisations continue: VirginCare took over Kent community services this month, one of many such moves. But less visibly, the NHS has been instructed to make capital-to-revenue transfers as “accounting adjustments” before April to bring the apparent debt down, according to the Health Service Journal this week.

Shabby public buildings and services will have their repair and refurbishment capital budgets taken to ease the look of current accounts – short-term and synthetic accounting. Osborne talks piously of reducing debt and deficit so as not to burden future generations, but instead he burdens them with a squalid, under-resourced public sector with debts in kind, such as Labour inherited in 1997 – schools with leaking roofs and outside toilets, hospital wards in war-time Nissen huts.

Failure to invest in people and skills, with deep cuts to further education colleges, is another way of diminishing national capital, as today the UK Commission for Employment and Skills says the shortage leaves one in four skilled jobs unfilled for lack of trained candidates in manufacturing, electricity, gas, water, construction and transport. Employers fear the 3m promised apprenticeships will be of low quality.

None of this will worry this government, as it dashes to strip everything public to bare bones, losing the experience, skills and memory that a thriving public sector needs. Already there is a grave shortage of people willing and able to become headteachers and heads of NHS trusts. University College London Hospital, a national flagship, is just one example: it has had to abandon its search and implore its current head to stay longer.

Sometimes this government over-reaches, forced to correct itself – on tax credits, or last night again in the Lords, with a small concession on one benefit. But the course is set, and it is not often diverted. Asset sales are an integral part of its long- term plan.